Survey Results Show Negative Impact Of Medicare Part D "Classes Of Clinical Concern"

Main Category: Medicare / Medicaid / SCHIP
Article Date: 31 Oct 2008 - 10:00 PDT

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A report of survey results issued by the Academy of Managed Care Pharmacy indicates that current government regulations requiring Medicare's Part D prescription drug plans to include all drugs in certain designated classes could be costing US taxpayers an additional $511 million per year. A new law, which could lead to an expansion of the number of drug classes, could increase that cost substantially. "Although enacted with the best intentions, the new law leaves the door open to even higher future costs," states Judith A. Cahill, CEBS, executive director of the Academy, "We believe it's not necessary. Patients' abilities to obtain the medications they require are already adequately protected."

Section 176 of the Medicare Improvement for Patients and Providers Act of 2008 (MIPPA), passed in July, defines a process for identifying classes of drugs that the Centers for Medicare & Medicaid Services (CMS) may designate as required in Medicare Part D formularies. Under current regulatory guidance, CMS designates six classes of drugs as "protected," including the immunosuppressants, antidepressants, antipsychotics, anticonvulsants, antiretrovirals and antineoplastics. Medications in these classes are used primarily in the treatment of HIV-AIDS, mental disorders, epilepsy and cancer. To date, the way that CMS has implemented the "protected" six-class provision is by requiring mandatory inclusion of "all or substantially all" of the drugs within each class on all Part D formularies.

With the passage of MIPPA, which takes effect in 2010, a pathway has been created for identifying and protecting additional medications. Manufacturers of drugs designated for mandatory inclusion will be ensured placement on all Medicare Part D formularies. To assess the impact of the law beneficiaries, the federal government and ultimately, taxpayers, the Academy of Managed Care Pharmacy contracted with Milliman, Inc., an internationally recognized consulting and actuarial firm, to conduct a survey of senior rebate contracting staff of Medicare Part D plan administrators.

The underlying structure of the Medicare Part D legislation is the competitive model, which relies on private sector drug plan sponsors to administrator the prescription drug benefit. The plan sponsors that qualify are directed to negotiate with drug manufacturers to secure the lowest price for the drugs they will cover on their drug formularies. The negotiating process that plan sponsors engage in with drug manufacturers for the entire range of pharmaceutical products is weakened when all drugs within a therapeutic class are required to be included on plan's formulary. Since all of the products included in these classes must be made available to beneficiaries, manufacturers have little incentive to negotiate lower prices for formulary concessions. This drives costs higher for plan providers and ultimately, the US taxpayer, and results in higher premiums for beneficiaries.

Cahill stresses, "In the private sector, thousands of patients are very effectively treated for these conditions every day, without mandates requiring formulary placement. Pharmacists and physicians research all available clinical evidence to find the right medications and therapies to meet the needs of their patient population. If for some reason a specific drug is not listed on a plan's formulary, processes exist to grant exceptions. We do not believe it is necessary to mandate the inclusion of every drug in a class to appropriately meet the needs of Medicare beneficiaries. Pharmacy benefit plans emphasize evidence-based decisions, providing safe and effective formulary choices at competitive costs that preserve access to affordable coverage for all members."

The full report describing the consequences of this law is available on the AMCP website. Go to Professional Practice >> AMCP Publications and scroll down to "Potential Cost Impacts Resulting from CMS Guidance…," or click on this link.

The Academy of Managed Care Pharmacy (AMCP) is a national professional association of pharmacists and other health care practitioners who serve society by the application of sound medication management principles and strategies to improve health care for all. The Academy's 5,700 members develop and provide a diversified range of clinical, educational and business management services and strategies on behalf of the more than 200 million Americans covered by a managed care pharmacy benefit. More news and information about AMCP can be obtained on its website, at http://www.amcp.org.

Academy of Managed Care Pharmacy